Presentation 3Q 2013 28 October 2013 1Q Legal Disclaimer This - - PowerPoint PPT Presentation

Results Presentation 3Q 2013

28 October 2013 1Q

2 of 28 / October 2013

Legal Disclaimer

This document was prepared by Bankia, S.A. ("Bankia") and is presented exclusively for informational purposes. It is not a prospectus and does not constitute an offer or recommendation to invest. This document does not constitute a commitment to subscribe, or an offer to finance, or an offer to sell, or a solicitation of offers to buy securities of Bankia, all of which are subject to internal approval by Bankia. Bankia does not guarantee the accuracy or completeness of the information contained in this document. The information contained herein has been obtained from sources that Bankia considers reliable, but BANKIA does not represent or warrant that the information is complete or accurate, in particular with respect to data provided by third parties. This document may contain abridged or unaudited information and recipients are invited to consult the public documents and information submitted by Bankia to the financial market supervisory authorities. All opinions and estimates are given as of the date stated in the document and so may be subject to change. The value of any investment may fluctuate as a result of changes in the market. The information in this document is not intended to predict future results and no guarantee is given in that respect. Distribution of this document in other jurisdictions may be prohibited, and therefore recipients of this document or any persons who may eventually obtain a copy of it are responsible for being aware of and complying with said restrictions. By accepting this document you accept the foregoing restrictions and warnings. This document does not reveal all the risks or other material factors relating to investments in the securities/transactions of Bankia. Before entering into any transaction, potential investors must ensure that they fully understand the terms of the securities/transactions and the risks inherent in them. This document is not a prospectus for the securities described in it. Potential investors should only subscribe for securities of Bankia on the basis of the information published in the appropriate Bankia prospectus, not on the basis of the information contained in this document.

3 of 28 / October 2013

Contents

1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data

4 of 28 / October 2013

3Q 2013 highlights

High degree of progress in branch closures and workforce adjustment RESTRUCTURING PLAN Over €1,900 million in cash generated by sale of non-strategic assets Increased productivity in the branch network BUSINESS ACTIVITY New business model Good performance of the business in the restructured network

2 1

Continued growth in net interest income and pre-provision profit FINANCIAL PERFORMANCE Stabilised cost of risk Efficiency ratio improvement

3

Significant strengthening of liquidity and solvency Net profit in line with estimates

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3Q 2013 highlights

 As of today 29.7% of the branches existing at

the end of 2012 have been closed.

 Restructured network at 30 September 2013

accounts for 88% of deposits and 87% of gross income generated in the branch network.

 Workforce has been reduced by 19.6% year

to date (4,019 employees) BRANCH CLOSURES ESTIMATED CLOSURES (PLAN) 1,143 CLOSURES COMPLETED TO DATE 929 % OF TARGET 81%

Restructuring plan 1

BRANCH NETWORK RESTRUCTURING AND CAPACITY ADJUSTMENT Network restructuring to be completed in Q1 2014, ahead of Strategic Plan schedule

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3Q 2013 highlights

Business activity 2

PRODUCTIVITY AND EFFICIENCY More productive and efficient organisational structure: 81% of the branches remaining after the restructuring are more than 15 years old OPERATING EXPENSES/ATAs EFFICIENCY RATIO STRICT DEPOSITS BY BRANCH (€m)

Dec 2012 30.5 Sep 2013 40.0 Dec 2012 46.6 Sep 2013 58.9

4Q 2012

0.78%

3Q 2013

0.70%

• 8 bps

4Q 2012

63.3%

3Q 2013

54.2%

• 9.1%

pts.

(1) Cost-to-income ratio excluding trading income and exchange differences

(1)

GROSS LENDING BY BRANCH (€m)

31.1% 26.4%

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3Q 2013 highlights

Business activity 2

NEW MODELS OF SUPPORT OFFICES FOR THE BRANCH NETWORK  Segmentation of the network and

• pening of a new branch model.

 A total of 28 Recovery and Liquidation

Centres (CLRs) will be in place in the areas with lower presence (non-natural territories). Recovery and Liquidation Centres (CLRs)

 Intense activity in monitoring and recovery of

NPLs

 Referral of high-value customers to the

appropriate branches

 Settlement activities

Transactional Centres “Oficinas Ágiles”

 High frequency transactions  Sale of basic products (credit cards, term

deposits, etc.)

 Extended opening hours

… ALLOWING GREATER BUSINESS FOCUS IN THE BRANCHES

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3Q 2013 highlights

Financial performance 3

 Profit before tax in the 3Q amount €229 million. Total pro forma accumulated to September 2013: €633 million.  Net interest income increases for the second consecutive quarter, to €643 million, and at the same time expenses reduce by 5%.

Results Asset quality Liquidity and solvency

 Reduction of NPLs for the third consecutive quarter in a cumulative amount of around €800 million in the first nine months of the year.  Coverage ratios are maintained on loan portfolios at 8.5% of the total portfolio and 62.6% of NPLs.  Reduction of the commercial gap continues and the LTD ratio improves to 116.7% .  Bankia again increases its capital ratio, by 74 bp in the quarter, reaching EBA Core Tier I of 11.06% .

9 of 28 / October 2013

3Q 2013 highlights

CASH GENERATED FROM COMPLETED SALES OF INVESTEES 1,133

Amounts in € million

Financial performance 3

DIVESTMENT PLAN More than €1,900 million of cash generated from sale of investees CASH GENERATED FROM SALES OF INVESTEES PENDING APPROVAL 779

ESTIMATED LIQUIDITY

To 30 June To 30 Sept

715 More than 70 sales and liquidations completed by the end of 3Q 2013

Others

10 of 28 / October 2013

Contents

1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data

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Bankia Pro Forma Income Statement 1Q / 2Q / 3Q 2013 – Key figures

A B C D

2Q 2013

The following pro forma income statement excludes the cost of the subordinated loan by BFA to Bankia, in the amount of €89m in 1Q and €53m in 2Q, which was cancelled on 23 May. In 2Q and 3Q 2013, profit from discontinued operations in amounts of €113 mill. and €21 mill., respectively, is included in profit from sale of investees and other profit.

3Q 2013 results

Bankia Group data. €m

Net interest income Gross Income Operating Expenses Pre-provision profit 633 958 (488) 470 Addition to provisions Profit before tax (585) 213 Profit from sale of investees and other profit 328

E

1Q 2013 601 957 (494) 463 (272) 191 3Q 2013 643 945 (464) 481 (294) 229 42

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3Q 2013 results

Net interest and fee income – Bankia

Bankia Group data. €m

Growth in Net Interest Income

(1) Actual numbers, adjusted for the finance cost associated with the subordinated loan from

BFA to Bankia, which was cancelled on 23 May.

A

Positive fee performance

• Change in net interest income trend initiated in 1Q 2013 is confirmed.
• Reduction in customer deposits cost
• Fees improvement vs. two prior quarters.

4Q12 91 731(1) 1Q13 601(1) 89 2Q13 633(1) 53 3Q13

643

4Q12 1Q13 2TQ3 3Q13 225 225

237

242 3Q12 762 (1) 18 3Q12 226

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Bankia Group data. €m

3Q 2013 results

The stability of gross income is maintained by the improvement in the primary banking business

Gross income – Bankia

Composition and trend of Gross Income

B

(1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase (2) Trading income + Exch. Diff. + Dividends + Equity method + Other operating income

3Q 13

945

1Q 13

957

601

(1)

633

958

(1)

2Q 13

643

Net interest income Fees

225 225 237

Other (2)

131 100 65

Gross Income

93% of Gross Income is generated by the primary business

+2.6% +3.9%

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Operating expenses – Bankia

Quarterly trend in operating expenses

C

Reduction of expenses by 5% from the previous quarter

3Q 2013 results

Bankia Group data. €m

Operating expenses/ Gross income (ex tr. income)

(1) Cost-to-income ratio excluding trading income and exchange differences

1Q 2013

494

4Q 2012

553

2Q 2013

488

3Q 2013

464

• 17.1%

1Q 2013 4Q 2012 3Q 2012

60.1% 63.3% 62.1% 54.2%

2Q 2013 3Q 2012

560

• 4,9%

62.1%

3Q 2012

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3Q 2013 results

Pre-provision profit – Bankia

D

Bankia Group data. €m

Fourth consecutive quarter of increased pre-provision profit

(1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase

PRE-PROVISION PROFIT / RWAs RATIO

3Q 13

481

4Q 12

351

(1)

91 260

1Q 13

463

89 374

(1)

417 53

470

(1)

2Q 13

0.34% 0.46% 0.48% 0.52%

+48.5%

481 18 306

3Q 12

0.23% 324

(1)

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3Q 2013 results

Profit before tax - Bankia

Pre-provision profit 1,414 (1) Profit from sales and other profit 317

E

Cumulative pre-tax profit is €633 million

Bankia Group data. €m

Recurring profit from discontinued

• perations

53 (2) 3Q 2013 Provisions (1,151) Profit before tax 633

(1) Includes €89 million in 1Q and €53 million in 2Q of net interest income due to impact of subordinated loan

Recurring cost

• f credit risk

accumulated at September ≈ 74 bps

(2) Includes recurring profit of Aseval

Accum 481 (294) 21 21 (2) 229 470 296 32 (2) 1Q 2013 (585) 213 2Q 2013 463 (272) 191

17 of 28 / October 2013

Contents

1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data

18 of 28 / October 2013

Asset quality and risk management

Portfolios Retail Corporates and SMEs 87.6 43.0

Gross amount

Developers 4.8

Credit quality

Bankia Group data. €bn

Total loan portfolio 145.8

Provisions as % gross loans

3.3% 14.8% 44.8% 8.0% Constant improvement of provision coverage ratios Dec 2012 Gross loans and provision coverage ratios

Gross amount

Sept 2013

Provisions as % gross loans

Total excluding developers 141.0 6.7% 83.5 39.1 4.5 133.2 3.4% 15.7% 52.5% 8.5% 128.7 7.0% The refinanced loans maintain a coverage rate of 24%

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Asset quality and risk management

Credit quality

Bankia Group data. €bn

Reduction of NPLs continues, with a cumulative decrease during the year of €786 million Evolution of NPLs and NPL coverage

1Q 2013

19.6

4Q 2012

19.8

2Q 2013

19.3

3Q 2013

19.0

NPLs (€bn) Total assets

152.5 149.6 144.5 140.3

NPL rate

13.0% 13.1% 13.4% 13.6%

NPL coverage

61.8% 61.9% 63.0% 62.6%

Reduction in NPLs (€bn)

NPLs Dec 2012 + Gross additions

• Recoveries

19.8

• Written off

NPLs Sept 2013

+ 3.0

• 3.4
• 0.4

19.0

Net additions

• 0.4

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Contents

1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data

21 of 28 / October 2013

Main liquidity indicators - Bankia

Commercial gap The reduction of commercial gap and LTD (%) continues

Liquidity and solvency

Commercial gap: Net loans – mediation loans – retail commercial paper – strict customer deposits LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)

Bankia Group data. €bn 4Q 2012

33.3

3Q 2013

27.6 LTD ratio

4Q 2012

120.4%

3Q 2013

116.7%

• 17.1%
• 3.7%

2Q 2013

29.6

2Q 2013

118.2%

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Liquidity and solvency

Capital generated organically

Bankia Group – CORE TIER I EBA

+ 37 bp

10.32% 11.06% JUN 2013 SEPT 2013 ↑Prof. (1) ↓RWAs

Bankia increases its Core Tier I EBA by 74 bp to more than 11%. Year to date Bankia has generated 144 bp of core capital

• Gener. organically: + 74 bp

+ 20 bp + 17 bp

SMEs

Note (1): Profit includes income attributable to the Group (161.5 million) during the quarter, plus other adjustments of Core Capital in an amount of 22 million.

9.62% Dec 2012 PF

• Gener. organically:

+ 70 bp BIS II RATIO 9.84% 10.52% 11.27%

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Contents

1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data

24 of 28 / October 2013

Conclusions We are making progress towards the objectives in the Strategic Plan…

• Accelerated restructuring plan. Lower than expected impact on the business.

The restructured network is returning to growth in terms of loans and deposits

• “Normalisation” of income statement. Financial income and fees are driving

income generation. Reduction of costs. New progress in recurrent efficiency. Active management of NPLs

• Divestment plan for non-strategic assets. Capital gains used to strengthen
• provisions. Generation of liquidity
• “Self-sustained” model of capital generation. Bankia’s Core Capital already

exceeds 11%

…in order to achieve ROE OF AROUND 10% in 2015

25 of 28 / October 2013

Contents

1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data

26 of 28 / October 2013

Actual cumulative Income Statement at 3Q 2013 – BFA Group and Bankia Group

BFA Group/ Bankia Group data. €m

BFA Group data

Net interest income 1,734 1,832 Dividends 7 147 Other revenue 977 967 Gross Income 2,718 2,946 Operating expenses (1,446) (1,452) Profit before tax 357 634 (1,151) Provisions and other expenses (1,404) Profit from sale of investees and other profit 235 544 1,272 1,494 Pre-provision profit Profit after tax 353 648 Tax (104) (86) Net profit associated with hybrids exchange* 969 Profit from discontinued operations 100 100

* In the published income statement the net profit associated with the hybrids exchange is included in "Other revenue" as trading income.

Reported profit after tax 1,617

27 of 28 / October 2013

BFA Group data

CASH GENERATED FROM COMPLETED SALES OF INVESTEES 2,462

Amounts in € million

DIVESTMENT PLAN More than €3,200 million of cash generated from sale of investees CASH GENERATED FROM SALES OF INVESTEES PENDING APPROVAL 779

ESTIMATED LIQUIDITY

To 30 June To 30 Sept

729 More than 70 sales and liquidations completed by the end of 3Q 2013

Others

Results Presentation 3Q 2013

28 October 2013 1Q 2013